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Weak Euro Doubles Eurozone ETF Losses

Lingering doubts about the health of the eurozone in the week
before Easter helped pull the euro lower last week, about doubling
losses for U.S. investors who own euro-denominated funds focused on
continental Europe.

The euro depreciated against the greenback by 2.08 percent,
further dragging down the performance of the iShares S&P Europe
50 Index Fund (NYSEArca:IEV) and the Vanguard MSCI European ETF
(NYSEArca:VGK). Currency losses made up roughly half of the two
ETFs' declines of more than 4 percent last week.

Those results made clear once again the influence currency
fluctuation have on returns in globalized investment markets, as
IndexUniverse's Currency Impact Report shows.

The table below illustrates the euro's effects in
particular.

MSCI Country
Indices

Local
Currency

1 Week

3 Months

12 Months

USD

Local

FX
Impact

USD

Local

FX
Impact

USD

Local

FX
Impact

Austria

EUR

-5.70%

-3.87%

-1.83%

11.52%

8.54%

2.98%

-32.12%

-25.44%

-6.67%

Belgium

EUR

-4.41%

-2.55%

-1.86%

15.77%

12.67%

3.09%

-9.51%

-0.62%

-8.89%

Czech Republic

CZK

-4.04%

-2.84%

-1.20%

10.29%

2.27%

8.02%

-18.43%

-9.44%

-8.99%

Denmark

DKK

0.34%

2.30%

-1.97%

19.04%

15.95%

3.09%

-11.19%

-2.67%

-8.52%

Finland

EUR

-4.72%

-2.87%

-1.85%

11.38%

8.41%

2.98%

-27.52%

-20.39%

-7.12%

France

EUR

-4.90%

-3.05%

-1.85%

10.26%

7.32%

2.95%

-20.81%

-13.03%

-7.78%

Germany

EUR

-4.11%

-2.25%

-1.87%

15.07%

12.00%

3.07%

-14.48%

-6.07%

-8.41%

Greece

EUR

-5.88%

-4.04%

-1.83%

12.85%

9.83%

3.01%

-63.86%

-60.31%

-3.55%

Hungary

HUF

-4.19%

-2.33%

-1.86%

25.87%

14.14%

11.73%

-41.02%

-27.54%

-13.48%

Ireland

EUR

-4.54%

-2.69%

-1.85%

14.87%

11.79%

3.08%

-0.22%

9.57%

-9.80%

Italy

EUR

-6.34%

-4.52%

-1.82%

7.18%

4.32%

2.86%

-33.10%

-26.53%

-6.58%

Netherlands

EUR

-4.61%

-2.76%

-1.85%

8.29%

5.40%

2.89%

-19.89%

-12.05%

-7.85%

Norway

NOK

-2.50%

-1.13%

-1.37%

12.50%

8.01%

4.49%

-12.30%

-6.78%

-5.52%

Poland

PLN

-3.18%

-1.18%

-2.00%

17.52%

6.05%

11.47%

-30.33%

-19.94%

-10.39%

Portugal

EUR

-5.01%

-3.16%

-1.85%

-1.86%

-4.48%

2.62%

-33.77%

-27.26%

-6.51%

Russia

RUB

-1.39%

-1.36%

-0.03%

12.83%

5.20%

7.63%

-22.06%

-18.97%

-3.09%

Spain

EUR

-6.21%

-4.39%

-1.82%

-3.52%

-6.10%

2.58%

-32.05%

-25.37%

-6.68%

Sweden

SEK

-4.22%

-2.61%

-1.61%

9.25%

6.22%

3.03%

-13.40%

-7.06%

-6.34%

Switzerland

CHF

-2.64%

-0.86%

-1.78%

9.21%

5.10%

4.11%

-3.33%

-2.93%

-0.41%

Turkey

TRY

-2.10%

-1.58%

-0.52%

27.51%

21.68%

5.83%

-23.43%

-9.32%

-14.11%

United Kingdom

GBP

-1.73%

-0.82%

-0.91%

6.48%

3.64%

2.84%

-4.25%

-1.30%

-2.95%

The euro's swoon affected other European ETFs that aren't even
denominated in euros, notably the iShares MSCI Switzerland Index
Fund (NYSEArca:EWL).

EWL fell nearly 3 percent last week, as the Swiss franc's
depreciation against the dollar followed in lock step with the
euro. Switzerland decided late last summer to peg its franc to the
euro-a move that aimed at controlling the franc's strength, which
was hurting Swiss exports.

Though European officials were successful in creating a $1
trillion euro emergency fund, investors have yet to believe that
the worst is behind. Bloomberg reported that Spanish and Italian
bonds declined last week as demand weakened for sovereign debt.

As foreign investors continue to reduce their holdings and
exposure to Europe, the belief is that the burden will now begin to
fall on domestic investors to pick up the slack. It remains to be
seen if domestic investors will create enough demand to keep yields
on European sovereign debt low enough to avoid further concern.

Of course, as the euro depreciates in the wake of shifting
demand for European sovereign debt, the dollar benefits from its
woes.

The PowerShares DB US Dollar Index Bullish Fund (NYSEArca:UUP)
finished the week up 1.32 percent. The fund's 57.6 percent short
exposure to the euro drove the bulk of returns as the dollar
strengthened against the plagued currency.

Other Currency News

In other currency news, the Brazilian real lagged behind other
Latin American currencies, as the dollar gained against emerging
markets currencies.

U.S. investors in Brazil saw negative returns of 2.06 percent, a
0.25 percentage point difference from local investors, who were
down 1.81 percent.

The outlook on Brazil still remains favorable, as yields on
Brazilian interest rate futures contracts fell for a third day
after economists cut inflation forecasts in South America's biggest
country.

Brazil, like its other emerging markets counterparts, is still
heavily dependent on consumer growth within the U.S.

To that extent, Friday's U.S. jobs report showing that the U.S.
economy added 120,000 jobs-much lower than expected from economic
forecasts-resulted in the Brazilian Bovespa Index of local equities
opening lower on Monday morning.

More information and data on currency performance is available
in this week's IndexUniverse Currency Impact Report.

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